Eskom signs a $1.5bn loan agreement with the China Development Bank

On Thursday, South African state-owned power utility Eskom signed a $1.5 billion loan agreement with the China Development Bank (CDB), which will form part of the financing of the Medupi Power Plant.

The signing ceremony was held at Eskom’s head office Megawatt Park in Sunninghill, Johannesburg.

China Development Bank

Eskom’s interim group chief executive Johnny Dladla, said: “We are pleased to see the continuation of the journey of co-operation that we started with our Chinese partners last year.”

Dladla added: “The conclusion of this second loan agreement continues to demonstrate financial markets’ confidence in Eskom and South Africa notwithstanding the challenging market conditions.”

He concluded: “We are confident that the agreement will cement Eskom’s relationship with the CDB. This loan will also aide us in ensuring that we complete the Medupi project and ensure security of energy supply.”

Optimistic about the deal is Eskom’s chief financial officer, Anoj Singh: “The loan fulfils our intent to diversify Eskom’s funding sources; to date Eskom has secured 77% of this fiscal year’s funding requirement (including cash on hand), we remain resolute that we will fully execute the required funding for the year.

“We are confident that our liquidity levels and financial profile will continue to improve and stabilise.”

Transformation strategy

The South African parastatal noted in a statement that Exco has focused efforts on turning around the company’s operational and financial performance.

Khoza noted that Eskom has not implemented load shedding for the past 23 months, and that the plan was to continue implementing appropriate levels of planned maintenance to ensure long-term plant reliability.

The reduction in unplanned outages contributed to improvements of plant availability and the resultant sharp reduction in the usage of open cycle gas turbines (diesel generators). Read more…

Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.